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Train companies take taxpayers for £2.7bn ride

Rail unions and transport campaigners today warned that rail franchising was fundamentally flawed and unsustainable after it was revealed that train operating companies (TOCs) made a £2.7bn net gain from taxpayers last year.

Analysis of official figures shows that in return for paying £1.17bn in premium costs to run services companies received total public subsidies of £3.88bn.

The figures, published this week by the Department of Transport, come as the government prepare to make an announcement on the future of the West Coast Mainline currently operated by Virgin.

Virgin last year made a £133m net gain from taxpayers’ subsidies which helped the company achieve pre-tax profits of nearly £40m, of which £29m went to shareholders.

The research shows that the taxpayer subsidy given to Virgin is seven times higher than that awarded to state-run East Coast Mainline, which last month reported operating profits of £7.1m that will be re-invested back into the service.

Passengers and campaigners from the Action for Rail campaign will today hold protests at train stations throughout the country warning that the cost of franchising has resulted in the most expensive fares in Europe and that the government is planning to close ticket offices, and de-staff trains and stations.

This activity will include a protest at 8am at London Euston station that will be attended by ASLEF general secretary Mick Whelan, TSSA general secretary Manuel Cortes and RMT assistant general secretary Mick Cash.

Campaigners will also be lobbying MPs on the day, calling for West Coast to be returned to public ownership as part of their wider campaign for an end to privatised rail.

Action for Rail Chair and TUC general secretary designate Frances O’Grady said: “These figures show the true nature of our privatised railways – a system of corporate welfare where train operators make a play of bidding for contracts knowing that their future revenue is underwritten by the taxpayer.

“The franchising process is fundamentally flawed and unsustainable. Ministers must learn from the East Coast Mainline which has shown that public operated railways can be more efficient and deliver better value for money.

“Instead of allowing public subsidies to end up in the pockets of shareholders the government should be using this money to invest in services that puts passengers first.”